Steve writes editorials for each issue of Forbes under the heading of “Fact and Comment.” A widely respected economic prognosticator, he is the only writer to have won the highly prestigious Crystal Owl Award four times. The prize was formerly given by U.S. Steel Corporation to the financial journalist whose economic forecasts for the coming year proved most accurate.

In both 1996 and 2000, Steve campaigned vigorously for the Republican nomination for the Presidency. Key to his platform were a flat tax, medical savings accounts, a new Social Security system for working Americans, parental choice of schools for their children, term limits and a strong national defense. Steve continues to energetically promote this agenda.

Steve Forbes Interview: Gilder On Tech Innovation

Forbes: Before we get to what’s made Silicon Valley, as you call it, a valley of green goo and some other obstacles, let’s hit on a couple of the other areas where you see enormous creativity. Interactive video, video teleconferencing and the like. You feel that it’s just exploded in terms of technology.

Gilder: Well, this is absolutely crucial. And this will require another transformation of the existing Internet as great as the transformation from the telegraph to the public switch telephone network 50 years ago or more. That created this great public switch telephone network that could deal with voice — the telegraph system could not deal with voice.

Now, we have this vast data-oriented Internet that hast to be upgraded to do interactive, full-motion, even 3-D video. And that’s a transformation like the transformation to voice. It will require a new network, a completely interactive fiber-speed network. That’s why I’m focusing on fiber speed technologies and the new architectures, new computer architectures that are indispensable to achieve this level of performance.

Forbes: And what are the companies you think are in the forefront there?

Gilder: Well, cloud computing — the immediate field is moving up to layer five, which is sessions. It’s called sessions. And to conduct voice or video sessions across the network in real time, you need to be able to interact between all sorts of different kinds of networks.

And this requires entities called session border controllers, which I think resemble routers in their impact. In previous eras the router dealt with all the different networks at layer three, but now it has to be real time, so it’s as if the whole router infrastructure has to be upgraded to layer five.

And companies like Acme Packet and Audio Codes — which is another Israeli one, and there are lots of others — that are doing that. Then that entails deep packet inspection, because if you’re doing all these things, all different networks across the world, you want to know what the content is of the various packets that are coming to you to make sure they aren’t part of some cyber attack or whatever. That’s why I like these companies that do deep packet inspection, including NetLogic. And Cavium also does chips for that purpose. These chips are going to be increasingly in demand as time passes.

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